Nectar change far from sweet for Sainsbury’s shoppers

Exactly a fortnight after Sainsbury’s was mocked for its now notorious ‘50p Challenge’ poster, the retailer is back under the glare of the social media spotlight.

This time it’s because from April next year card holders of its loyalty scheme Nectar will earn one point for every £1 spent in store or online, versus the current two points per £1.

It announced the decision yesterday by sending out emails to customers – and you can imagine how the news went down with them.

“Classic corporate foot-shooting. Nectar was never generous at Sainsbury’s. Since the big supermarkets hit the buffers their contempt for the customer can no longer be disguised. Their desperation is palpable. Aldi and Lidl grinning like Cheshire cats,” is one of the growing number of comments on thegrocer.co.uk.

It’s also topic of the day on Sainsbury’s Facebook page. “Sneaky sneaky Sainsbury’s. Advertise that you are as good value as Asda and Tesco then reduce the Nectar points you can earn to 1 point per £1. Might have to move to Aldi as they appear have more transparent deals than the big supermarkets!” was one of the many comments on the topic.

Another Facebook user wrote: “Even though you are on my doorstep, I will now not be shopping with you AT ALL due to the reduction in Nectar points. Talk about shooting yourself in the foot when you are losing out to Aldi and Lidl hand over fist!”

Feelings are running just as high over on Twitter, with tweets such as “Thanks @sainsburys for halving the Nectar points we get. It makes the new @waitrose at the end of my road an even more appealing prospect!”, and “I hear @sainsburys has brought a new points card out called Arthur. Oh sorry it’s still Nectar but they’re halving the points next year”.

The backlash is understandable given the popularity of Nectar – more than 19 million people in the UK have a card. Of course the card is not exclusive to Sainsbury’s; shoppers can pick up points at companies such as Homebase, eBay and British Gas. The changes announced this week only relate to Sainsbury’s.

Sainsbury’s email to customers contained further disappointments for shoppers. Not only is the number of Nectar points per £1 being slashed, Sainsbury’s will also stop giving out Nectar points when shoppers reuse bags in store (currently one point per bag). However, shoppers will be still be able to earn one point per litre of fuel.

Sainsbury’s prides itself on being an environmentally friendly company (it was awarded Green Retailer of the Year at this year’s The Grocer Gold Awards), so to not reward shoppers for doing their bit for the environment, but to reward them for buying tanks of fuel, seems a bizarre move. It also further alienates shoppers who don’t have a car.

The customer email points out that though shoppers will earn fewer ‘base’ points, it will be holding more ‘bonus events’. “At times like Christmas, we’ll also be holding bigger and better Double Up events to give you great value when we know it matters most to you,” the email stated. But that ‘double up’ event will leave a sour taste in the mouth of shoppers who will know that ‘double up’ actually means ‘what they would have been earning prior to the changes’.

Sainsbury’s knows how important Nectar is to its business. Releasing its full-year results in May, former CEO Justin King said Nectar, together with its coupon-at-till scheme Brand Match, would “allow us to outperform our peers in the year ahead”.

“Nectar gives us a key competitive advantage, and in conjunction with coupon-at-till technology, enables us to offer our customers truly targeted offers on products that they want to buy and to incentivise multichannel shopping,” he said.

That was five months ago and since then, with new CEO Mike Coupe at the helm, Sainsbury’s has changed Brand Match so that it just compares Asda’s prices, and has now made adjustments to Nectar.

Do these actions give us an indication of Coupe’s plans for the business? Does the recent move to a mid-low price strategy suggest a focus on price rather than reward? His strategic review, to be unveiled on 12 November, will reveal all.